Fairfax Financial Holdings Ltd.’s second-quarter profit dropped 74%, as the year-before quarter’s results benefited from investment gains the company said after markets closed on Thursday.

Net income at the financial holding company, whose interests include property, casualty and life insurance units, was US$46 million, or US$3.05 a share, in the quarter, down from US$173.7 million, or US$12.09 a share, in the year-before period.

Realized gains on investments totalled US$104.6 million compared to US$403.7 million in 2003.

Fairfax said US$40.1 million of the 2004 realized gains resulted from the company’s sale of 6 million common shares of its Northbridge subsidiary in an underwritten secondary offering.

The company said revenue for the quarter retreated 11.9% to $1.44 billion from $1.63 billion.

Underwriting profit at the company’s continuing insurance and reinsurance operations increased to US$54.9 million from US$13.8 million in 2003.

Net premiums written at the company’s continuing insurance and reinsurance operations increased 7.1% to US$1.09 billion.

At Friday midday, Fairfax shares were down 45¢ to $206.63 on the Toronto Stock Exchange.